For the likes of Edokpolo, a 38 year old bank worker managing their salary even though huge is seriously a challenge. Before the month ends, they are already broke because of lack of financial prudence.
Edokpolo goes from cranky to physical aggression. Do not make the expensive mistake of asking him for money because “I won’t find it funny with you,” he says. Although he earns a senior management wage in six figures, they have never taken him beyond three weeks. “I surprised myself one particular month when I discovered I still had about twenty per cent of my salary left in my account. It was like a miracle.” He enthused at his achievement.
Ever before he receives his alert, Victor would have mentally distributed the money to expenses he describes as “sacrosanct”. These, he says, include “fuelling the car for the month, monthly club membership fee, settling his outstanding debts, and utility bills.” The rest he spends on food, clothes, “I usually have friends coming by every time and some of them will ask for one financial favour or the other which I usually don’t deny. They are my guys.” After the third week the money is out and Victor is broke. He’s options will be to take more debt, “I’m credit worthy.” Surprisingly most of his “guys” keep their distance during this period only to return in the boom time.
It was the once renowned time management consultant, Alan Lakein, who said that “planning is bringing the future into the present so that you can do something about it now.” Prudence is a basic personal accounting principle which ensures that income, expenses and assets are not overstated or understated. Essentially it keeps you in check. Aside from living within your means, it is an effective tool for wealth creation.
Spending money is a responsibility and it requires a certain level of maturity which unfortunately many salary earners lack. Kunbi Wuraola, CEO of Discover Your Potential, DYP, defines personal finance as “the ability to manage money and be disciplined to save and invest. Because the ability will result in your spending for only what you need instead of your wants.”
It is possible to live and save on a monthly salary, “all it requires is discipline,” she says. No salary is too small so long as you learn how to manage it. Besides no matter how much you earn there will always be expenses to make. Even when salaries are increased expenses will always rise to meet income. Make a budget and be sure to prioritize primary needs over secondary wants. Setting up a budget will most likely remove the possibility of ending up in debt like Victor. Unexpected costs are minimally reduced and you can easily spot potential areas for saving. Importantly, with a good budget you are likely to increase credit rating for a mortgage when you apply.
“Avoid impulse buying. Don’t be pressured by peers/colleagues to buy things out of your reach or budget. Things like expensive hair extensions, designer items and fashion trends deplete your account so fast.” Kunbi advises. Plan ahead of the salary, have a basic financial plan in place. The inescapable expenses should always come first. Then, do a plan for savings and follow it diligently.
Apart from maintaining a savings culture, invest your money. There are many options for investments like shares, land, business or you can take a course to develop yourself and enhance your market value.
Frank Eleanya
